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How corporate governance affects productivity in civil-law business environments: Evidence from Latin America

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  • Gaitán, Sandra
  • Herrera-Echeverri, Hernán
  • Pablo, Eduardo

Abstract

We examine the relationship between corporate governance and productivity in nonfinancial publicly traded firms based in Latin America. Using a sample of 670 firm-year observations from 2006 to 2014, we find that board size, gender diversity, institutional ownership, and the presence of independent directors affect firms' productivity. We find a statistically significant nonlinear relationship between board size and productivity. Institutional ownership increases productivity, while board independence decreases it. However, when the country's business friendliness and institutional ownership are controlled, the relationship between board independence and productivity turns positive and statistically significant. Finally, a higher proportion of female directors decreases productivity.

Suggested Citation

  • Gaitán, Sandra & Herrera-Echeverri, Hernán & Pablo, Eduardo, 2018. "How corporate governance affects productivity in civil-law business environments: Evidence from Latin America," Global Finance Journal, Elsevier, vol. 37(C), pages 173-185.
    • Handle: RePEc:eee:glofin:v:37:y:2018:i:c:p:173-185
    DOI: 10.1016/j.gfj.2018.05.004
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    More about this item

    Keywords

    Productivity; Governance; Emerging markets; Country environment;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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